Russia is set to resume oil flows to central Europe after Hungary’s sole refiner settled a payment issue with regards to a transit fee to Ukraine. As a result, Russian crude-pipeline operator Transneft received confirmation from Ukraine that it is ready to resume oil transit.
Crude from the Druzhba pipeline, which transports Russian crude through Ukraine to Hungary, Slovakia, and the Czech Republic, is expected to reach Slovakia by the end of the day on Wednesday. The pipeline’s operations were halted on August 4 after European banks refused to transfer a payment from Transneft to Ukraine’s Ukrtransnafta JSC as a result of European Union sanctions resulting from Russia’s invasion of Ukraine. Hungary’s MOL Nyrt, which also owns Slovakian refiner Slovnaft, managed to pay the transit fee on Wednesday, thereby enabling the resumption of oil flow from the pipeline.
After gaining on Tuesday, crude dropped by 1.5% to $94.85 a barrel following the end of the Druzhba pipeline halt. The resumption of Druzhba oil flows will do much to alleviate the energy supply shortages faced by Europe which include road fuel shortages. Still, the continent will have to identify ways to overcome its Russian natural gas shortage and low river levels.